THE REGION

THE REGION; In New Jersey's Race, The Principal Issues Are Taxes and Taxes

By PETER KERR

Published: March 19, 1989

TRENTON—
NO one can talk politics for long in New Jersey without talking about a state tax system that many people believe is out of whack. But the question of how to fix it brings forth a plethora of ideas that pit poor cities against rich suburbs, Democrats against Republicans, and legislator against legislator.

Most of all, the tax issue in recent weeks has given gubernatorial candidates a way to define themselves in a crowded field running to succeed Gov. Thomas H. Kean, a Republican who is barred by law from a third term.

To liberals, the problem is a tax system that places a heavy burden on property owners, taxing on the basis of the property the residents own rather than on their ability to pay. To conservatives, the problem is too much state government. Slice the bureaucracy, they say, and property taxes will fall.

The tax debate has intensified this election year as revenues fell below expectations and Mr. Kean proposed a budget that he said was ''austere.'' Many municipalities expect that they will have to raise property taxes to make up for smaller-than-expected state aid.

To placate property-tax payers, Mr. Kean recently proposed that the state take over from the counties the costs of running the courts and the welfare system, programs that are now paid for largely by local property taxes. To pay for them, the state would impose a new tax on alcoholic beverages and repeal a tax rebate for homeowners.

Enter the gubernatorial candidates, who have attacked Mr. Kean's position from both right and left. Despite Mr. Kean's continuing personal popularity, some Republicans are distancing themselves from his fiscal policies as the state's budget problems worsen.

On the Republican side, the two leading candidates - Charles L. Hardwick of Union County, the State Assembly Speaker, and United States Representative James A. Courter of Warren County - have denounced the Kean plan as another step to make taxes higher and government bigger.

Mr. Hardwick is portraying himself as a true conservative trying to thwart the Governor's liberal instincts on taxes. Mr. Hardwick proposes reducing property taxes by returning the receipts of a state tax on utilities to municipalities, giving them $311 million.

Meanwhile, Mr. Courter has attacked the Kean proposals as a tax increase by another name. ''You don't cut property taxes by raising state taxes,'' Mr. Courter said. ''To me, that resembles the ancient belief that the way to cure illness is to make people bleed.''

But the Courter campaign has also attempted to link Mr. Hardwick with the growth of state government. Gordon Hensley, a spokesman for Mr. Courter, said, ''You can't act like a fiscal conservative in an election after you have spent most of your time proposing spending like a liberal Democrat.''

The other Republican contenders looking toward a primary election June 6 include W. Cary Edwards, a former State Attorney General from Bergen County, who is trying to establish himself as one of the three top candidates in the race. But as a close associate of Mr. Kean, he is hesitant to attack the Governor's tax proposals.

Mr. Edwards's longtime foe from Bergen County, State Senator Gerald Cardinale, who is also in the race, has sought to use the tax issue to show that Mr. Edwards is too liberal for most Republicans. Mr. Cardinale has promised to cut by one-fourth the 42,000 employees hired under Mr. Kean and his predecessor, Gov. Brendan Byrne.

Another contender, State Senator William L. Gormley of Atlantic County, stresses geography as the only Republican candidate from southern New Jersey. Two others, Lois Rand, a former State Commerce Department official, and Thomas Blomquist, a retired Coast Guard captain, have said they will run as well.

On the Democratic side, United States Representative James J. Florio, endorsed by 20 of the 21 Democratic county chairmen before officially entering the race, has deplored high property taxes but has not offered a counterproposal. His silence is the strategy of a candidate who believes he has a big lead and wants no controversy.

One of Mr. Florio's two Democratic challengers, Assemblyman Alan J. Karcher of Middlesex County, has offered the most detailed tax plan. He says he would raise income taxes for the wealthy and would end sales tax exemptions for liquor by the drink, plastic packaging, cable television and tobacco, allowing the state to cut property taxes.

The other Democratic challenger, Barbara Boggs Sigmund, the Mayor of Princeton, has said that she will focus on the easing of local property taxes, among other issues.